Intrinsic value of Walmart - WMT

Previous Close

$97.85

  Intrinsic Value

$68.29

stock screener

  Rating & Target

sell

-30%

Previous close

$97.85

 
Intrinsic value

$68.29

 
Up/down potential

-30%

 
Rating

sell

We calculate the intrinsic value of WMT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2018), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 293.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047
   2048

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.00
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
Revenue, $m
  515,353
  531,845
  549,821
  569,296
  590,290
  612,833
  636,961
  662,716
  690,147
  719,306
  750,256
  783,060
  817,789
  854,521
  893,338
  934,326
  977,580
  1,023,198
  1,071,286
  1,121,956
  1,175,326
  1,231,520
  1,290,671
  1,352,917
  1,418,404
  1,487,288
  1,559,730
  1,635,903
  1,715,986
  1,800,168
Variable operating expenses, $m
  491,077
  506,733
  523,799
  542,287
  562,219
  583,620
  606,526
  630,977
  657,018
  684,701
  712,258
  743,401
  776,372
  811,243
  848,094
  887,006
  928,069
  971,377
  1,017,030
  1,065,134
  1,115,801
  1,169,149
  1,225,304
  1,284,397
  1,346,568
  1,411,963
  1,480,736
  1,553,051
  1,629,078
  1,708,997
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  491,077
  506,733
  523,799
  542,287
  562,219
  583,620
  606,526
  630,977
  657,018
  684,701
  712,258
  743,401
  776,372
  811,243
  848,094
  887,006
  928,069
  971,377
  1,017,030
  1,065,134
  1,115,801
  1,169,149
  1,225,304
  1,284,397
  1,346,568
  1,411,963
  1,480,736
  1,553,051
  1,629,078
  1,708,997
Operating income, $m
  24,276
  25,112
  26,022
  27,008
  28,072
  29,213
  30,435
  31,740
  33,129
  34,606
  37,997
  39,659
  41,418
  43,278
  45,244
  47,320
  49,510
  51,821
  54,256
  56,822
  59,525
  62,371
  65,367
  68,520
  71,836
  75,325
  78,994
  82,852
  86,908
  91,171
EBITDA, $m
  39,706
  40,976
  42,361
  43,862
  45,479
  47,216
  49,075
  51,060
  53,173
  55,420
  57,804
  60,332
  63,007
  65,837
  68,828
  71,986
  75,319
  78,833
  82,538
  86,442
  90,554
  94,884
  99,441
  104,237
  109,282
  114,589
  120,171
  126,040
  132,210
  138,696
Interest expense (income), $m
  2,351
  2,510
  2,714
  2,939
  3,185
  3,451
  3,738
  4,046
  4,375
  4,727
  5,102
  5,501
  5,924
  6,372
  6,847
  7,349
  7,879
  8,439
  9,030
  9,654
  10,311
  11,003
  11,733
  12,500
  13,309
  14,159
  15,054
  15,996
  16,986
  18,027
  19,121
Earnings before tax, $m
  21,766
  22,398
  23,083
  23,824
  24,621
  25,476
  26,390
  27,364
  28,401
  29,503
  32,497
  33,735
  35,046
  36,431
  37,895
  39,441
  41,071
  42,791
  44,603
  46,512
  48,522
  50,639
  52,867
  55,211
  57,677
  60,271
  62,998
  65,866
  68,881
  72,050
Tax expense, $m
  5,877
  6,047
  6,232
  6,432
  6,648
  6,878
  7,125
  7,388
  7,668
  7,966
  8,774
  9,108
  9,462
  9,836
  10,232
  10,649
  11,089
  11,553
  12,043
  12,558
  13,101
  13,673
  14,274
  14,907
  15,573
  16,273
  17,010
  17,784
  18,598
  19,454
Net income, $m
  15,889
  16,350
  16,851
  17,391
  17,973
  18,597
  19,264
  19,976
  20,733
  21,538
  23,723
  24,627
  25,583
  26,595
  27,664
  28,792
  29,982
  31,237
  32,560
  33,954
  35,421
  36,966
  38,593
  40,304
  42,104
  43,998
  45,989
  48,082
  50,283
  52,597

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  210,692
  217,434
  224,784
  232,746
  241,329
  250,545
  260,409
  270,939
  282,153
  294,075
  306,728
  320,139
  334,337
  349,355
  365,224
  381,981
  399,665
  418,315
  437,975
  458,690
  480,509
  503,483
  527,666
  553,114
  579,887
  608,049
  637,666
  668,807
  701,548
  735,964
Adjusted assets (=assets-cash), $m
  210,692
  217,434
  224,784
  232,746
  241,329
  250,545
  260,409
  270,939
  282,153
  294,075
  306,728
  320,139
  334,337
  349,355
  365,224
  381,981
  399,665
  418,315
  437,975
  458,690
  480,509
  503,483
  527,666
  553,114
  579,887
  608,049
  637,666
  668,807
  701,548
  735,964
Revenue / Adjusted assets
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
Average production assets, $m
  136,053
  140,407
  145,153
  150,294
  155,837
  161,788
  168,158
  174,957
  182,199
  189,897
  198,067
  206,728
  215,896
  225,594
  235,841
  246,662
  258,081
  270,124
  282,820
  296,196
  310,286
  325,121
  340,737
  357,170
  374,459
  392,644
  411,769
  431,878
  453,020
  475,244
Working capital, $m
  -2,577
  -2,659
  -2,749
  -2,846
  -2,951
  -3,064
  -3,185
  -3,314
  -3,451
  -3,597
  -3,751
  -3,915
  -4,089
  -4,273
  -4,467
  -4,672
  -4,888
  -5,116
  -5,356
  -5,610
  -5,877
  -6,158
  -6,453
  -6,765
  -7,092
  -7,436
  -7,799
  -8,180
  -8,580
  -9,001
Total debt, $m
  50,253
  54,426
  58,975
  63,903
  69,216
  74,921
  81,027
  87,545
  94,487
  101,866
  109,698
  118,000
  126,789
  136,085
  145,908
  156,280
  167,226
  178,771
  190,940
  203,763
  217,269
  231,490
  246,459
  262,211
  278,784
  296,216
  314,549
  333,826
  354,092
  375,396
Total liabilities, $m
  130,419
  134,592
  139,141
  144,069
  149,382
  155,087
  161,193
  167,711
  174,653
  182,032
  189,864
  198,166
  206,955
  216,251
  226,074
  236,446
  247,392
  258,937
  271,106
  283,929
  297,435
  311,656
  326,625
  342,377
  358,950
  376,382
  394,715
  413,992
  434,258
  455,562
Total equity, $m
  80,274
  82,843
  85,643
  88,676
  91,946
  95,458
  99,216
  103,228
  107,500
  112,042
  116,863
  121,973
  127,383
  133,104
  139,150
  145,535
  152,272
  159,378
  166,868
  174,761
  183,074
  191,827
  201,041
  210,736
  220,937
  231,667
  242,951
  254,816
  267,290
  280,402
Total liabilities and equity, $m
  210,693
  217,435
  224,784
  232,745
  241,328
  250,545
  260,409
  270,939
  282,153
  294,074
  306,727
  320,139
  334,338
  349,355
  365,224
  381,981
  399,664
  418,315
  437,974
  458,690
  480,509
  503,483
  527,666
  553,113
  579,887
  608,049
  637,666
  668,808
  701,548
  735,964
Debt-to-equity ratio
  0.630
  0.660
  0.690
  0.720
  0.750
  0.780
  0.820
  0.850
  0.880
  0.910
  0.940
  0.970
  1.000
  1.020
  1.050
  1.070
  1.100
  1.120
  1.140
  1.170
  1.190
  1.210
  1.230
  1.240
  1.260
  1.280
  1.290
  1.310
  1.320
  1.340
Adjusted equity ratio
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  15,889
  16,350
  16,851
  17,391
  17,973
  18,597
  19,264
  19,976
  20,733
  21,538
  23,723
  24,627
  25,583
  26,595
  27,664
  28,792
  29,982
  31,237
  32,560
  33,954
  35,421
  36,966
  38,593
  40,304
  42,104
  43,998
  45,989
  48,082
  50,283
  52,597
Depreciation, amort., depletion, $m
  15,430
  15,865
  16,339
  16,854
  17,408
  18,003
  18,640
  19,320
  20,044
  20,814
  19,807
  20,673
  21,590
  22,559
  23,584
  24,666
  25,808
  27,012
  28,282
  29,620
  31,029
  32,512
  34,074
  35,717
  37,446
  39,264
  41,177
  43,188
  45,302
  47,524
Funds from operations, $m
  31,319
  32,215
  33,190
  34,245
  35,381
  36,600
  37,904
  39,296
  40,777
  42,351
  43,529
  45,299
  47,173
  49,154
  51,248
  53,458
  55,790
  58,250
  60,842
  63,573
  66,450
  69,479
  72,666
  76,021
  79,550
  83,262
  87,166
  91,270
  95,585
  100,121
Change in working capital, $m
  -75
  -82
  -90
  -97
  -105
  -113
  -121
  -129
  -137
  -146
  -155
  -164
  -174
  -184
  -194
  -205
  -216
  -228
  -240
  -253
  -267
  -281
  -296
  -311
  -327
  -344
  -362
  -381
  -400
  -421
Cash from operations, $m
  31,394
  32,298
  33,280
  34,342
  35,486
  36,713
  38,025
  39,425
  40,914
  42,497
  43,684
  45,463
  47,347
  49,338
  51,442
  53,663
  56,006
  58,478
  61,082
  63,827
  66,717
  69,760
  72,962
  76,332
  79,877
  83,606
  87,528
  91,651
  95,986
  100,542
Maintenance CAPEX, $m
  -13,214
  -13,605
  -14,041
  -14,515
  -15,029
  -15,584
  -16,179
  -16,816
  -17,496
  -18,220
  -18,990
  -19,807
  -20,673
  -21,590
  -22,559
  -23,584
  -24,666
  -25,808
  -27,012
  -28,282
  -29,620
  -31,029
  -32,512
  -34,074
  -35,717
  -37,446
  -39,264
  -41,177
  -43,188
  -45,302
New CAPEX, $m
  -3,916
  -4,354
  -4,746
  -5,141
  -5,543
  -5,951
  -6,370
  -6,799
  -7,242
  -7,698
  -8,171
  -8,660
  -9,169
  -9,697
  -10,248
  -10,821
  -11,419
  -12,043
  -12,695
  -13,377
  -14,090
  -14,835
  -15,616
  -16,433
  -17,289
  -18,185
  -19,125
  -20,110
  -21,142
  -22,224
Cash from investing activities, $m
  -17,130
  -17,959
  -18,787
  -19,656
  -20,572
  -21,535
  -22,549
  -23,615
  -24,738
  -25,918
  -27,161
  -28,467
  -29,842
  -31,287
  -32,807
  -34,405
  -36,085
  -37,851
  -39,707
  -41,659
  -43,710
  -45,864
  -48,128
  -50,507
  -53,006
  -55,631
  -58,389
  -61,287
  -64,330
  -67,526
Free cash flow, $m
  14,264
  14,339
  14,493
  14,686
  14,914
  15,178
  15,476
  15,809
  16,177
  16,579
  16,524
  16,996
  17,505
  18,051
  18,635
  19,258
  19,921
  20,626
  21,375
  22,168
  23,007
  23,896
  24,834
  25,826
  26,872
  27,975
  29,139
  30,365
  31,656
  33,016
Issuance/(repayment) of debt, $m
  3,766
  4,173
  4,549
  4,928
  5,313
  5,705
  6,106
  6,518
  6,942
  7,379
  7,832
  8,302
  8,789
  9,296
  9,823
  10,373
  10,946
  11,544
  12,170
  12,823
  13,506
  14,221
  14,969
  15,752
  16,573
  17,432
  18,333
  19,277
  20,266
  21,304
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  3,766
  4,173
  4,549
  4,928
  5,313
  5,705
  6,106
  6,518
  6,942
  7,379
  7,832
  8,302
  8,789
  9,296
  9,823
  10,373
  10,946
  11,544
  12,170
  12,823
  13,506
  14,221
  14,969
  15,752
  16,573
  17,432
  18,333
  19,277
  20,266
  21,304
Total cash flow (excl. dividends), $m
  18,030
  18,512
  19,043
  19,614
  20,227
  20,883
  21,582
  22,327
  23,119
  23,958
  24,356
  25,298
  26,294
  27,347
  28,458
  29,631
  30,867
  32,171
  33,544
  34,991
  36,514
  38,116
  39,803
  41,578
  43,444
  45,407
  47,471
  49,641
  51,922
  54,320
Retained Cash Flow (-), $m
  -2,405
  -2,569
  -2,800
  -3,033
  -3,270
  -3,511
  -3,758
  -4,012
  -4,273
  -4,542
  -4,821
  -5,110
  -5,410
  -5,722
  -6,046
  -6,385
  -6,737
  -7,106
  -7,490
  -7,893
  -8,313
  -8,753
  -9,214
  -9,696
  -10,201
  -10,730
  -11,284
  -11,865
  -12,474
  -13,113
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  15,625
  15,943
  16,243
  16,581
  16,957
  17,371
  17,824
  18,315
  18,846
  19,416
  19,535
  20,188
  20,884
  21,625
  22,412
  23,246
  24,130
  25,065
  26,054
  27,098
  28,200
  29,363
  30,590
  31,882
  33,244
  34,678
  36,187
  37,776
  39,448
  41,207
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  14,981
  14,596
  14,135
  13,652
  13,144
  12,607
  12,042
  11,448
  10,826
  10,179
  9,277
  8,615
  7,941
  7,260
  6,580
  5,907
  5,250
  4,616
  4,012
  3,443
  2,917
  2,436
  2,005
  1,624
  1,293
  1,012
  777
  584
  431
  310
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company operates through three segments: Walmart U.S., Walmart International and Sam's Club. The Walmart U.S. segment includes its mass merchant concept in the United States operating under the Walmart or Wal-Mart brands, as well as digital retail. The Walmart International segment consists of the Company's operations outside of the United States, including various retail Websites. The Walmart International segment includes various formats divided into three categories: retail, wholesale and other. These categories consist of various formats, including supercenters, supermarkets, and warehouse clubs, such as Sam's Clubs, cash and carry, home improvement, specialty electronics, apparel stores, drug stores and convenience stores, as well as digital retail. The Sam's Club segment includes the warehouse membership clubs in the United States, and samsclub.com.

FINANCIAL RATIOS  of  Walmart (WMT)

Valuation Ratios
P/E Ratio 21.9
Price to Sales 0.6
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 9.5
Price to Free Cash Flow 14.3
Growth Rates
Sales Growth Rate 0.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.5%
Cap. Spend. - 3 Yr. Gr. Rate -4.1%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 54%
Total Debt to Equity 59%
Interest Coverage 10
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 10.7%
Ret/ On T. Cap. - 3 Yr. Avg. 11.4%
Return On Equity 17.2%
Return On Equity - 3 Yr. Avg. 18.7%
Asset Turnover 2.4
Profitability Ratios
Gross Margin 25.6%
Gross Margin - 3 Yr. Avg. 25.2%
EBITDA Margin 6.8%
EBITDA Margin - 3 Yr. Avg. 7.1%
Operating Margin 4.7%
Oper. Margin - 3 Yr. Avg. 5.1%
Pre-Tax Margin 4.2%
Pre-Tax Margin - 3 Yr. Avg. 4.6%
Net Profit Margin 2.8%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 30.3%
Eff/ Tax Rate - 3 Yr. Avg. 30.9%
Payout Ratio 45.6%

WMT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WMT stock intrinsic value calculation we used $500343 million for the last fiscal year's total revenue generated by Walmart. The default revenue input number comes from 2018 income statement of Walmart. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our WMT stock valuation model: a) initial revenue growth rate of 3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for WMT is calculated based on our internal credit rating of Walmart, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Walmart.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of WMT stock the variable cost ratio is equal to 95.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for WMT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Walmart.

Corporate tax rate of 27% is the nominal tax rate for Walmart. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the WMT stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for WMT are equal to 26.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Walmart operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for WMT is equal to -0.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $77869 million for Walmart - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2995 million for Walmart is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Walmart at the current share price and the inputted number of shares is $293.1 billion.

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COMPANY NEWS

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▶ Walmart, Amazon price battle benefits consumers: Bill Simon   [Aug-17-18 07:32PM  Fox Business Videos]
▶ DoorDash dishes up $4 billion valuation with new funding spurt   [05:16PM  American City Business Journals]
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▶ Top 5 Things to Know in the Market on Friday   [09:20AM  Investing.com]
▶ Retail Roundup: Earnings Winners and Losers   [08:28AM  Bloomberg Video]
▶ [$$] US grocers scramble to compete online   [06:00AM  Financial Times]
▶ Day Ahead: Top 3 Things to Watch   [07:48PM  Investing.com]
▶ [$$] A Big Smiley Face at Walmart   [07:40PM  The Wall Street Journal]
▶ [$$] Consumer Spending Lifts Retailers   [07:39PM  The Wall Street Journal]
▶ Why Walmart Shares Are Soaring   [06:33PM  Bloomberg]
▶ Walmart family fortune surges   [06:30PM  Bloomberg]
▶ Walmart's Focus On Its People Is Paying Off   [06:26PM  TheStreet.com]
▶ Business Highlights   [05:54PM  Associated Press]
▶ What Happened in the Stock Market Today   [05:09PM  Motley Fool]
▶ Your Evening Briefing   [05:00PM  Bloomberg]
▶ Walmart Whallops Amazon for a While   [04:40PM  Bloomberg]
▶ Walmart and Symantec jump; JC Penney tumbles   [04:24PM  Associated Press]
▶ Why Walmart Inc Stock Jumped Today   [02:57PM  Motley Fool]
▶ 3 Reasons Walmarts Stock Is Fairly Valued   [01:59PM  InvestorPlace]
▶ Walmart Rises 10.09% in Earnings Season   [12:40PM  Investing.com]
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